More than £16,000 of landlord and tenant funds has been left without a clear route to recovery following the latest agency expulsions by The Property Ombudsman.
Analysis by The Letting Partnership of six agencies expelled last week found that three cases involved client money breaches, with gaps in protection leaving funds effectively unrecoverable.
In two cases, the agencies had no client money protection (CMP) cover in place at the point of expulsion, while in a third, cover had lapsed.
Brimar Property Services was expelled over £950 of missing client money and had no CMP cover in place. Skampi, where awards totalling more than £5,000 were made, also had no active protection, with £3,250 still outstanding.
STRUCTURAL ISSUES
Meanwhile, Hunter Ashley was removed after more than £12,000 of client money could not be accounted for, with its CMP cover having expired prior to expulsion.
In total, £16,200 appears to have been left without access to scheme-backed reimbursement, exposing both landlords and tenants.
The findings point to wider structural issues across the sector. While CMP, redress and compliance frameworks are already in place, The Letting Partnership said the lack of a single, unified oversight mechanism allows agents to fall out of compliance without being flagged.
This fragmentation means different schemes hold separate pieces of information, with no consistent process to verify whether an agent meets all regulatory requirements at any given time.
TIME TO FILL THE GAPS
Chris Mason (main picture, inset), Chief Operating Officer of The Letting Partnership, says: “Last week’s expulsions are a clear example of the gaps that can exist within the current system.
“Whilst the industry has multiple compliance schemes in place, there is no single, independent process that gives everyone the same verified picture of whether an agent is compliant.
“In three of the six cases highlighted by The Property Ombudsman, the expulsion related to client money issues.
“In two of those cases there was no CMP cover in place and in the third the cover had lapsed. As a result, more than £16,000 of landlord and tenant money appears to have been left with limited realistic prospect of recovery.”
INCONSISTENCY OF OVERSIGHT
And he adds: “This is not a criticism of any individual scheme. The Property Ombudsman, CMP schemes and membership bodies all have their own role to play and all are working towards the same goal. The issue is that each holds only part of the picture.
“At present, an agent can be compliant with one scheme, fall behind with another, or allow their cover to lapse without there being any consistent mechanism to identify and flag the problem.
“It is the inconsistency of oversight, rather than the lack of regulation, that is leaving consumers exposed.”
VERIFIED AUDIT
And he says: “The solution is a single, independently verified annual audit that is recognised across the industry. One review, completed once per year, could be shared with redress schemes, CMP providers, franchisors and membership bodies to ensure everyone is working from the same information.
“The Letting Partnership’s HealthCheck already provides that independent audit process and is already recognised by Propertymark, Money Shield and Client Money Protect. Wider adoption across the industry would help close the current compliance gaps and reduce the likelihood of landlords and tenants being caught out in future.
“If the industry cannot demonstrate that it is able to identify and close these gaps itself, the risk of further regulation becomes increasingly difficult to avoid.”
